Hedge Fund Assets Top $2 Trillion for the First Time

Hedge Funds Hit New Record with $2 Trillion in AssetsHedge funds, which experienced sharp drops in assets during the credit crisis, now hold an all-time high of more than $2 trillion in capital, according to a new survey by Hedge Fund Research Inc., which analyzed their first-quarter numbers. The figure is a 50% improvement from crisis-driven lows reached in the first quarter of 2009. Investors allocated $32 billion in net new capital in the first quarter, the largest quarterly net inflow since the third quarter of 2007, the firm said.

The financial crisis and recession took a heavy toll on the sector: The investment environment was so severe in 2008 that nearly 700 hedge funds closed in the first three quarters.

The question now is whether hedge funds' assets are about to move down again. While some make money through investments in currencies and options, others rely on bets which cover stock market increases and the rise in commodities prices. It's almost certainly no accident that fund sizes have grown during the last two years, a period in which the Dow Jones Industrial Average moved up nearly 60% and the prices of some commodities doubled.

The investment advantage of hedge funds is that they use their borrowing capacity as leverage to increase their ability to make investments, but this advantage is can also become their Achilles' heel. If their investments falter, their ability to pay back what they have borrowed is often limited. The funds' high level of leverage also threatens banks, because they are usually the sources of the borrowed capital.

Excessive leverage was, in the minds of many analysts, one of the key triggers of the financial crisis. Bankers would argue that their balance sheets are stronger than they were in 2008, when they held tens of billions of dollars in mortgage-backed paper. That improvement will not keep bank earnings from suffering if bets by some hedge funds do not play out and financial firms are unable to recover the large amounts of money they loaned to them.

Increase your money and finance knowledge from home

Behavioral Finance

Why do investors make the decisions that they do?

View Course »

Socially Responsible Investing

Invest in companies with a conscience.

View Course »

Add a Comment

*0 / 3000 Character Maximum

2 Comments

Filter by:
Dereck

Major Fraud Alert


The entire Federal Banking System under FirstGov has been "Consumed" and "Levied" by way of a Maryland State Circuit/District Court Ruled “Appropriation and Garnishment” of all Future Earnings prior to and after 2004 against Bank Of America by way of the F.D.I.C. Regulations Prohibiting failing Banks from Merging with other failing Banks between the Dates of 08/04/08 and 10/09/09.

Bank of America violated the 21st Century Act: Final Amendments to Regulation CC Section: http://www.federalreserve.gov/boarddocs/press/bcreg/2004/20040726/attachment.pdf

seeking reimbursement of Credit, Loan, and Finance Balances as a "Bank Entity" and not a "Nonbank Consumer" as specified on Pages 85 and 86.

The person they sued through a LLC. Debt Collection Company and Law Firm was the "World Fortune Owner" who "Counterclaimed" and won.

Now all Contracts of any Corporations (Including Employment) under the "Controlling Interest" of any Investment Bank Worldwide are "Null and Void", and are also under the stipulated Rules and Regulations of an "Closely-held S Corporation rendering all Employed under Legal Actions against “Domination”, and also means that "No Corporation can hold Shares" officially making every Stock Exchange on the Planet a "Ponzi Scheme" by default.

Businesses owned by the States (Public Corporations) are being sold Stock Shares by Corporations also under the Federal Banking System in this Worldwide "Ponzi Scheme". The World Fortune Company Merrick Inc. Sweden is dissolving Millions and Billions of Dollars from "All Levels of Government"in the U.S. of Financing based upon Years of "negligent inaction" involving this case.

The Federal Government has already been forced to discontinue supplying the Financing States use to pay their debts, Persons in Government Offices may want to begin to take their jobs more seriously, these are different times from 10 Years ago and you will not be accepted civil servants here just because you say you are here to do the right thing.

May 29 2011 at 12:10 AM Report abuse rate up rate down Reply
Dick Ceisner

WHAT IS A HEDGE FUND

April 20 2011 at 7:43 PM Report abuse rate up rate down Reply
1 reply to Dick Ceisner's comment
Franco

You buy a million dollar house with one dollar, (comissions added to this dollar, of course) and If the market goes down fifty cents, you lose the house. If the market goes up one dollar, u make fifty cents. :(

April 22 2011 at 1:57 AM Report abuse -1 rate up rate down Reply
GrayHatsBeGone

Hedge managers with IBM in the mix might want to start to sleep with one eye open !

IBM $10 MILLION BRIBERY FINE IS JUST THE TIP OF THE ICEBERG !

A Federal Judge OK's the IBM Devon IT PONZI RICO trial - that's the ultimate ugly underbelly for IBM's 100th Anniversary and IBM annual stockholder meeting in St. Louis' on April 26, 2011 !

100th Anniversary Book Excerpt #6, details and links - -

www.ibmTheWidowMaker.com

TWITTER -- www.Twitter.com/MadamePJBailey (IBM Widow)

April 20 2011 at 3:36 PM Report abuse +1 rate up rate down Reply